Global Business Environment

Topics: International trade, Economics, European Union Pages: 7 (2232 words) Published: December 16, 2010








To What Extent Are European Entrepreneurs Seeking To Start New Businesses At ADisadvantage Compared To Their American Rivals?

The European Union and the United States are each other's main trading partners and enjoy the largest bilateral trade relationship in the world. In 2007 their combined economies accounted for nearly 60 % of global GDP, approximately 33 % of world trade in goods and 44% of world trade in services.

The onset of the financial crisis in 2008 resulted in a rapid deterioration of the real economy all over the world, which had a major impact on trade volumes. In this changing environment the United States and the European Union are the main engines of global growth and must remain committed to free and non-discriminatory trade. For this reason, the unfolding economic recession makes the transatlantic relationship even more pertinent.

Available at: (Acessed:28 February).

International trade remains a central aspect of the activity economic growth and development processes of most modern societies. According to Krugman (1991), nations are engaged in the international trade for two reasons.

The first is that countries that traded in the international market are not necessarily similar, but different each other, trade helps poor countries benefit from their differences, acquiring foreign market that has not or is not economically feasible to produce in the local market, and reaching, as a result, a certain improvement in local production. The second reason refers to the countries market to achieve economies of scale in production, so that the expansion of markets and customers purchase their products allows each country to produce only a very limited range goods on a larger scale and more efficient that attempting to produce a variety of goods to meet certain local markets.

In this regard, international trade can be interpreted as the engine that drives growth and international competitiveness as the fuel said motor fuels (Ezeala-Harrison,1999).

“An entrepreneur is an individual who owns a firm, business, or venture, and is responsible for its development”. (Shukla, 2009)

In reality, any person with business knowledge along with a good business idea can become an entrepreneur. One of the most important factors of becoming an entrepreneur and starting up a business is having the financial capabilities to support the firm.

“Entrepreneurship is the practice of starting a new business or reviving an existing business, in order to capitalize on new found opportunities”. (Shukla, 2009)

Generally, entrepreneurs have a desire for developing their own business ideas or improving them but, you can also find that some entrepreneurs like to start up their own business to provide them with more stability, security and a better financial situation.

Europe and the United States two of the biggest and strongest economies in the world share different perspectives of entrepreneurialism. In the United States the entrepreneurship involvement is much higher than in Europe due to the people’s preferences in the business world. In the United States people prefer to be self-employed and become a business owner. Meanwhile, in Europe people prefer to be employed which affects deeply entrepreneurial initiation.

The United States has a big advantage which is the participation of two important types of investors that help start-up firms grow which are “business angles” and “Venture Capital Firms”. Europe’s few fast growing ventures do not succeed enough to grow at an international level due to their poor financial capabilities.

“Compared to the US, there is less entrepreneurial dynamism in the European Union. Europeans are less involved than Americans in new entrepreneurial initiatives and European businesses do not grow as much as in the US”. (EU Commission,...
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